India’s oil import bill may jump as global oil prices rise to nearly $100 a barrel amid West Asia war — All we know | Today’s news

India’s oil import bill is set to jump as Brent futures rose over 2% to around $99 a barrel on Tuesday, while United States West Texas Intermediate (WTI) crude rose 3% to close to $94 a barrel, PTI reported on September 8.

Prices jumped due to renewed inflationary pressures from the US-Iran war and escalating tensions in West Asia after Saudi energy infrastructure was attacked. There are concerns that the latest development could further disrupt global oil supplies, the report said.

Could India’s oil prices rise due to global pressure?

India is the third largest oil importer in the world – it buys more than 88% of the oil used for petrol and diesel from abroad, making it highly vulnerable to price fluctuations in international markets, he added.

Sustained price hikes are increasing the country’s dollar import bill and may put pressure on the trade balance and the rupee, analysts said.

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Higher oil prices can also add to domestic inflation through fuel, transportation and other energy-related costs, they said, adding that the impact on consumers and the broader economy depends in part on how much of the increase is passed on to domestic fuel prices and how long international prices remain elevated.

Currently, retail prices of petrol and diesel remain frozen for more than three months. The rates were last revised on May 25, when they were increased ₹2.61/litre for petrol and ₹2.71/liter for diesel. The increases were part of a rate review that took place in the second half of May in response to an international rise in prices as a result of the war in West Asia, which disrupted energy flows from the Gulf countries.

Overall, the price of gasoline rose by ₹7.35 liters and diesel would ₹7.53 in four installments.

India’s OMCs will feel the pinch of rising oil prices

Rising oil prices will put pressure on margins at fuel retailers Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL), which are already grappling with accumulated losses as they are unable to pass on the full impact of rising oil prices due to the West Asian crisis, the report added.

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India’s oil import bills rose more than 56% to $63.4 billion during April-July, compared to $40.5 billion in the same period last year, according to the petroleum ministry’s Petroleum Planning and Analysis Cell (PPAC).

Purchased volumes remained almost flat at 81.9 million tonnes in the first five months of the current fiscal and 81.5 million tonnes last year. A basket of crude oil imports into India averaged $106.26 per barrel on Monday, according to PPAC.

The basket consists of sweet or low sulfur (Brent) and sour grades containing more than 0.5% sulfur (Oman and Dubai average) in a ratio of 77.81:22.19.

India’s crude oil basket has breached the $100 mark and the September average is $100.75 per barrel against $90.19 in August and $82.04 in July.

The US-Iran war poses a challenge to limited oil supplies

“Renewed hostilities between Iran and the US pose a challenge to limited oil supplies passing through the Strait of Hormuz. In addition, as Iran threatens to establish a new restricted maritime zone extending beyond the Strait of Hormuz, additional energy flows beyond the Strait of Hormuz may be at risk,” said Prashant Vasisht, senior vice president and head of joint group, Icra for Corporate Ratings.

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As a result of these developments, oil prices have increased in recent days and the Indian crude oil basket crossed the $100/barrel mark, he said, “Due to the sharp increase in oil prices, the marketing margins of auto fuels are likely to turn negative and the domestic under-recovery of LPG could increase from the current situation. ₹200 per cylinder.”

The disruption comes as traffic across the strait, a key route for global energy supplies, has slowed sharply. The waterway normally transports about a fifth of the world’s daily supply of oil and liquefied natural gas. West Asian oil supplies have fallen to about 11 million barrels a day from about 18 million barrels a day amid the conflict.

In India’s case, the effect of higher oil prices goes beyond the import bill. Refineries, fuel distributors, airlines, petrochemical companies and other energy-intensive industries may face higher costs when oil prices rise.

According to Wood Mackenzie, the Hormuz disruption significantly changed the trajectory of oil demand in Asia. Asia-Pacific oil demand is not expected to return to pre-conflict levels until the end of 2027, after a projected decline of 1.24 million barrels per day in 2026.

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Petrochemical feedstocks were the most affected, especially LPG and diesel in markets dependent on SoH transit flows, while road fuels remained more resilient.

“India is leading the regional recovery, first surpassing pre-conflict demand levels, followed by Southeast Asia. Chinese oil demand likely peaked before the conflict broke out,” it said.

Wood Mackenzie said the extension of the conflict in West Asia to the end of the year will reduce global oil supply by an estimated 1.4 million barrels per day (bpd) in the fourth quarter of 2026, led by Asia.

For India, a short increase in oil prices would have a more limited impact than a long period of increased prices, which could put more pressure on inflation, the current account and the currency.